Hawaiian Electric Co. has agreed to reduce by $60 million the amount of revenue it will seek to recover from ratepayers as a result of a settlement the utility negotiated with the state consumer advocate.

Under the settlement announced Monday, HECO will write off $40 million that it had hoped to collect to help cover the cost of two major projects, a biofuel-fired power plant in Campbell Industrial Park and a new customer information system. The utility also agreed to withdraw its request to raise electricity rates for Hawaii island customers served by its subsidiary Hawaii Electric Light Co. The request was for a rate increase of 4.2 percent, or $19.8 million.

"Once all those things had been rolled into the rate base, it would have resulted in higher electricity costs. Now bills will not go up as much," said Jeffrey Ono, executive director of the state Division of Consumer Advocacy.

The $195 million Campbell Industrial Park power plant went online in 2010. HECO was able to recover some of the cost of the plant as part of a rate case approved in 2010 by the Public Utilities Commission. However, the PUC deferred part of HECO’s request because of cost overruns, Ono said.

HECO sought to have the costs built into the rate base based on preliminary estimates. "But the costs far exceeded their estimate," Ono said. "That’s when it became sticking point."

Ono said the agreement to withdraw the 2013 rate case for HELCO customers was the result of community feedback received by his office and the utility during recent public hearings there. Hawaii island was hit harder than other islands by the recent economic recession, and its rates are higher than on Oahu or Maui, other islands served by HECO and its subsidiaries.

"What we were trying to do was give some special dispensation for Big Island residents because of the special challenges they face," Ono said.

The settlement is subject to approval by the PUC.

"We believe the rate case settlement agreement we reached with the consumer advocate is fair and recognizes how difficult times are for our customers," said Lynne Une­mori, a HECO spokes­woman, in a statement. "High fuel prices are continuing to affect our customers and hurt our state economy."

Separately, HECO announced that it has begun buying electricity from the city’s expanded HPOWER waste-to-energy plant. The added capacity will reduce the amount of garbage dumped into landfills. HECO will pay a price for the energy comparable to what it is paying for energy generated by large-scale wind and solar projects, the utility said.

The PUC recently approved a power purchase agreement under which HECO will pay the city an average of 22.4 cents a kilowatt-hour through the life of the 20-year contract.

At the low end of recent power purchase agreements, HECO is paying 21.8 cents a kilowatt-hour for solar energy from the Kalaeloa Two project in West Oahu.

The utility is paying 22.9 cents a kilowatt-hour for power produced by the new Kawailoa wind project on the North Shore. It is paying 23.6 cents a kilowatt-hour for utility-scale solar energy it buys from developers under its feed-in tariff program.

The expanded HPOWER plant provides enough firm, renewable power to serve the needs of 65,000 homes on Oahu.

With the expansion, the plant will be able to burn 582,000 tons of municipal solid waste per year, or 45 percent of all solid waste produced on Oahu. That’s up from 440,000 tons or 35 percent of all waste previously.